By Mona Ali, Phenomenal World, January 27, 2023
When NATO held its two-day summit in Madrid in June 2022, the Spanish government deployed ten thousand police officers to cordon off entire parts of the city, including the Prado and the Reina Sofia museums, to the public. A day before the summit began, climate activists staged a “die-in” in front of Picasso’s Guernica at the Reina Sofia, in protest against what they identified as the militarization of climate politics. That same week, the US Supreme Court had removed federal protections for abortion rights, clamped down on the US Environmental Protection Agency’s ability to curb greenhouse gas emissions, and expanded the right to carry concealed weapons in the United States. In contrast to the chaos at home, at the summit, President Joe Biden’s team projected a revivified notion of hegemonic stability.
Primarily a transatlantic military alliance, NATO represents the concentration of global power in the North Atlantic.1 In its self-described 360-degree approach to integrated deterrence—involving cyber-tech and “interoperability” between Allied defense systems—NATO is a twenty-first century Benthamite panopticon, under whose gaze lies the rest of the world. In the name of upholding democratic values and institutions, NATO has assigned itself the role of global crisis manager. Its extra territorial mandate now spans addressing “conflict-related sexual violence” to climate adaptation.
In NATO’s own hierarchy, the United States occupies the role of Supreme Commander. Its vision statement explicitly affirms America’s nuclear capability as the cornerstone of North Atlantic security. In response to Russia’s war on Ukraine, NATO took an aggressive stance, updating its policy manifesto to revoke the strategic partnership it had established with Russia in 2010. Its updated 2022 mission statement upholds the longstanding policy that if one NATO member is attacked, Article 5 may be invoked, allowing the alliance to engage in retaliatory attack.
A common myth propagated by economists is that in breaking down international trade and investment, wars interrupt globalization. Historians Adam Tooze and Ted Fertik have complicated this narrative. They argue that World War I activated the networks of nineteenth century globalization and violently realigned them. Similarly, the war in Ukraine has irrevocably altered the global landscape. The invasion was followed by the Group of 7 nations expelling Russia from the Western-controlled global financial system. Since then, the West has fought its counter-incursion on economic turf via embargoes on Russian trade, seizures of Russian foreign exchange reserves, and significant military support to Ukraine. Britain’s donation of a squadron of Challenger 2 tanks to Ukraine marks the first such delivery by NATO allies of powerful military hardware to be used on the battle-field. At the January 20 summit of top military brass (and representatives from some fifty countries) at NATO’s Allied Air Command base in Ramstein, Germany held off permitting its Leopard 2 tanks to be supplied. Later that day, protests broke out in Berlin with youth demanding “Free the Leopards.” (On January 25, they did so.) Both Vladimir Putin and Volodymyr Zelensky have framed the Ukraine war as one between Russia and NATO allies. The supply of heavy Western weaponry confirms that view.
The war in Eastern Europe has reassembled the entire global economic and energy system. As financial and trade networks were weaponized, so too were transnational energy infrastructures. Blaming Canadian sanctions, which blocked the return of a Canadian-maintained Siemens gas turbine to a Gazprom (the Russian state-owned gas giant) station, Russia drastically reduced the gas flowing through the Nord Stream I pipeline to Germany.2 Soon after European governments accepted the US Treasury’s plan to cap the price of Russian crude oil, Putin suspended the supply of natural gas flows to Europe via the Nord Stream I. Before the war last year, Russia supplied forty percent of Europe’s gas and a quarter of all oil and gas traded globally; its commodity exports were exempt from Western sanctions. Cutting off Russia from the global economy in 2022 has created energy shortages globally and escalated prices, especially in Europe. The ratcheting up of global commodity prices, too, particularly for fuel and food, has prompted the biggest inflationary spike since the 1970s.
In response to the crisis, Europe is now relying on the US for energy imports; forty percent of its liquified natural gas now comes from the US, a stunning reversal from just last year when Europe shunned American LNG over concerns about the carbon emitted as part of its production and transportation. Much to the chagrin of climate activists, the EU parliament has voted to include natural gas, a fossil fuel, in its taxonomy of sustainable energy. Securing America’s most lucrative foreign market in Europe, the Biden administration has scored an unlikely coup for the hydrocarbon dollar.
One major decision that came out of the Madrid summit was the establishment of a permanent US military base in Poland, part of the largest US military expansion in Europe since the Cold War. Over a hundred thousand US troops are now stationed in Europe. Another outcome of the summit was the updating of NATO’s “military and political adaptation” strategy. In a naked power grab, NATO proposed that it “should become the leading international organization when it comes to understanding and adapting to the impact of climate change on security.” It intends to do this by “investing in the transition to clean energy sources and leveraging green technologies, while ensuring military effectiveness and a credible deterrence and defense posture.” In NATO’s new climate framework, the energy transition has effectively been co-opted into an imperial project.
War ecology meets militarized adaptation
NATO’s new framework of militarized adaptation recalls a version of what philosopher Pierre Charbonnier calls “war ecology.” Charbonnier’s concept speaks to the growing proximity of decarbonization and geopolitics, often in militarized form. He urges Europe to break its dependence on imported fossil fuels and reclaim energy and economic sovereignty via decarbonization. He also argues that political ecology should yoke decarbonization to a grand narrative that includes broader social transformation. Large-scale financial, technological, and administrative mobilizations required for a clean energy transformation have historically been associated with “total war.”
The war in Ukraine, which has accelerated Europe’s commitment to the energy transition, seems to confirm Charbonnier’s war ecology thesis. This geopolitical understanding mediates between the tragic view, which declares the impossibility of limiting carbon emissions to avoid the most catastrophic impact of climate change, and the naïveté of techno-optimists who believe that carbon sequestration technologies can be scaled up in time to limit planetary warming to 1.5 degree Celsius. Writing of the economic warfare and the suffering it entails for ordinary people across the globe, Charbonnier warns of the possibility of political ecology’s subordination to the military imperative. He cautions that war ecology may devolve into ecological nationalism and argues that climate advocates must disrupt the discourse of realpolitik and its complete cooptation by powerful interests while channeling the financial, logistical, and administrative capacities of “big states” and “big energy” towards green investment and infrastructure.
Perhaps most powerfully, Charbonnier’s concept of war ecology helps connect the dots between the transformative growth agenda of the energy transition and the single entity that is seemingly exempt from the inertia of American procedural legalism: its military-industrial complex. Given what American legal scholar Cass Sunstein calls “the dark cloud that now looms over the administrative state,” and the nonpartisan nature of the US defense spending, it is likely that climate finance will in future be folded into the US Department of Defense budget.
At first glance, NATO’s “militarized adaptation” appears to be an immaculate solution to otherwise delayed climate action. It can also be understood as an outcome of the normalization of emergency powers during the pandemic. In the US, the Defense Production Act and International Emergency Economic Powers Act have been activated several times over the last two and a half years to produce ventilators and vaccines, to import infant formula, and to seize foreign assets. Declarations of emergency might irk libertarians and academics but they generally pass under the radar of much of the American public.
In fact, climate activists pushed Biden to declare a climate emergency and to deploy emergency powers to enact a Green New Deal. Biden responded with a June 6 executive order, the Defense Production Act For Clean Energy, which bypasses electoral gridlock to expand green infrastructure such as wind farms on federal land. The order also states that it will mandate fair labor practices to build America’s clean energy arsenal. In terms of foreign relations, this new legislation simultaneously rolls back tariffs on Asian solar technology imports (critical to US solar manufacturing capacity) while avowing to “friend-shore” green supply chains between Allies.
The war has been hugely profitable for oil and gas producers, whose incomes have more than doubled compared to their five-year average. With roughly a third of the world’s energy supply still coming from oil, a bit less than a third from coal, and about a quarter from natural gas, renewables comprise less than a tenth of global energy supply—there is plenty of profit to be made. Surging prices have pushed Saudi Aramco, the world’s biggest oil company, ahead of Apple as the world’s most profitable company. The US, however, is the world’s biggest oil and gas producer, contributing to forty percent of the global supply.
For various reasons—including the collapse in crude oil prices in 2020, as well the fear of stranded fossil fuel assets as the energy transition accelerates—oil and gas producers are increasingly reluctant to ramp up investment. This has translated into low inventories and high prices. While Saudi Arabia has the largest inventories globally, the biggest upstream investment increases in the industry are expected from US oil and gas firms. Investment in liquified natural gas has been the strongest across fossil-fuel asset classes. In the wake of sanctions against Russia, the US is poised to become the world’s leading LNG exporter. Windfall oil and gas profits in 2022 would be enough to fund a decade of investment in low-emission fuels that could meet the global net zero emissions target. As is clear from the blowback against Russian sanctions, states interfering in markets compromises efficiency. But governments not intervening in the event of market-externalities (emissions) can be costly on a planetary scale.
As fossil-fuel prices have soared, wind and solar alternatives have become cheaper. Investment in clean tech is now overwhelmingly driven by European oil and gas majors. The energy shock in Europe will continue to accelerate the trend towards renewables, but upstream disruptions in, for instance, the supply of rare-earth minerals (of which China is the world’s largest supplier) have slowed down green production chains. During US Treasury Secretary Janet Yellen’s trip to Senegal, Zambia, and South Africa—made on the heels of China’s foreign minister Qin Gang’s visit—there were discussions on electric vehicle battery manufacturing involving local critical minerals.
While the boom in oil prices benefits petroleum producers, rising prices at the pump are a significant driver of voter dissatisfaction in the US. Forecasts that Democrats would hemorrhage votes in the upcoming US midterm elections propelled an urgent bid by the Biden administration to tamp down gasoline prices. It conducted its first onshore oil-lease sales on public land, released a plan for offshore oil drilling, and supplicated a tarnished Saudi monarch to produce more oil, all U-turns from its former clean energy promises. The latter proved unsuccessful as the group of oil producing and exporting countries (OPEC plus, which includes Russia) announced dramatic cuts in oil production in the fall of 2022.
Progressives have jumped on the bandwagon. Recent proposals by left-leaning think tanks in the US include state-backed funding for new domestic drilling and nationalizing US oil refineries. The American stance is that building new fossil-fuel infrastructure is preferable to drawing down Russian sanctions in exchange for a political settlement and continued Russian energy exports to the West.
Core vs. periphery
Weaponizing financial and trade infrastructures has compounded both the energy and economic crises, which are now engulfing large parts of the world economy. The confluence of inflation, interest-rate hikes, and relentless dollar appreciation has led to debt distress (or high risk of debt distress) in sixty percent of all low-income economies. Russia, too, has defaulted on its debt, although not for a lack of finances. Rather, under the latest sanctions regime, the West refuses to process Russia’s external debt repayments.
Germany’s new rearmament commitments and the push for a new joint European armed force run parallel to the European Central Bank’s commitment to stabilize its sovereign bond markets. Member states have proposed reforms to the EU’s Stability and Growth Pact that will remove military and green spending from deficit and debt strictures. The drive for renewables in Europe is inextricably tied to energy independence from Russia. The energy shock has prompted the European Central Bank—unlike the Federal Reserve and the Bank of England—to commit to greening its asset purchases. With the euro hitting a twenty-year low against the dollar in the fall, the perceived threat to European sovereignty is not only coming from Russia, but also from American monetary and military encroachment.
Charbonnier’s view that Europe’s march towards energy independence should be framed as a grand historical narrative seems improbable. Having shut down its nuclear plants, acute energy shortages have led Germany, with its most green government yet, to expand a controversial coal-field—resulting in a violent crackdown on environmental activists protesting the decision in Lützerath. LNG is a much more segmented global market than oil, with starkly different prices in different world regions. Higher spot prices in Europe’s gas market prompted LNG suppliers to break contracts by invoking force majeure clauses and rerouting tankers originally headed for Asia to Europe. 70 percent of American LNG is now headed to Europe, resulting in acute supply shortages in the periphery of the world economy. Pakistan, already reeling from last year’s catastrophic floods, is now facing an energy and external debt crisis as well. Among the most climate-vulnerable nations in the world, Pakistan owes $100 billion in foreign loans. To stave off a balance of payments crisis, China recently loaned the country $2.3 billion.
In Pakistan, militarized adaptation means having the army deliver food and tents to millions of newly homeless people. For those of us under NATO’s nuclear umbrella—which, according to the organization, spans thirty nations and 1 billion people—militarized adaptation increasingly looks like fortification against a sea of climate migrants, especially from Africa to Europe. The American defense contractor Raytheon, lauded by the US Environmental Protection Agency for its climate leadership, has touted the demand for military products and services in the face of climate emergency. The same set of military assets may be deployed to control an influx of climate refugees.
The war in Ukraine has crystallized the emergence of two distinct energy, economic, and security blocs—one coalescing around the North Atlantic (NATO) and the other around the large developing economies or BRICS (Brazil, Russia, India, China, South Africa). In a weaponized world economic order, foreign policies are simultaneously operating along different geopolitical axes. India—a member of the Quad (Australia, India, Japan, US)—has been doing this somewhat successfully under the guise of neutrality. Japan is revising its constitution to eliminate its pacifist foreign-policy stance, and which will enable the US military’s presence in the Indo-Pacific. An intensified war ecology may also produce some positive outcomes; the G7’s Global Green Infrastructure and Investment plan is, after all, a geopolitical response to China’s Belt and Road Initiative.
Amidst the many uncertainties of a weaponized world economic order, what is clear is that the energy transition will involve significant macroeconomic instability and inequality, the likes of which we haven’t encountered before. It is also clear that much of the collateral damage will be borne by the periphery. Before the Ukraine war, it was estimated that the global South required $4.3 trillion to recover from the pandemic. The lending provided by leading multilateral lenders such as the IMF and the World Bank has been grossly insufficient. IMF lending is at a record high (extending across some forty economies) but the bulk of its trillion dollar coffer lies unused.
Another almost-a-trillion-dollars in IMF-issued international reserve assets known as Special Drawing Rights lie cloistered in mostly rich-country central banks or treasury departments. In the $650 billion pandemic-related SDR issuance in 2021, an entire two thirds of the total issuance went to upper income countries and only one percent went to low income countries. 117 billion SDRs (about $157 billion) are currently held by the US alone. As international reserve assets, SDRs serve many functions: as foreign exchange reserves, they can reduce sovereign financing costs and help stabilize currencies; re-channeled to multilateral development banks as equity, SDRs can leverage more lending; regularly issued as was originally intended under the 1944 Bretton Woods arrangement, SDRs can be an important source of financing the clean energy transition.
The most powerful multilateral lenders and core countries continue to eschew their responsibility to provide greater financial relief via a comprehensive debt restructuring mechanism or via rechanneling SDRs to multilateral development banks. Meanwhile, in the face of severe external financing difficulties, large developing economies like Egypt and Pakistan are expanding their reliance on bilateral creditors such as China and the Gulf states, somewhat ironically with the IMF’s encouragement. These attempted paths out of the crisis indicate the new “non-alignments” across low- and middle-income countries.
- Essentially G7 in representation although NATO, unlike the G7, has a secretariat and charter.
- At the urging of the German economy minister Robert Habeck, the Canadian government issued a sanctions waiver allowing the repaired turbine to be delivered to Germany. Later, German chancellor Olaf Scholz would end up charging Gazprom with failing to meet its contractual obligations to take delivery of the repaired turbine. By December 2022, the pipeline was no longer operational, and the Canadian government rescinded its sanctions waiver.